Bloomberg Surveillance · Monday, September 14, 2026
Naomi Fink from MOVA Asset Management explained that the current weakness of the Japanese yen is primarily due to a large amount of liquidity in the system, rather than a reflection of Japan's economic health. Despite the weak yen, Japan's underlying inflation has been above the Bank of Japan's target for several years, indicating economic progress.
“Well, longer term, let's take a look at measures of fair value of the yen, which we're very far away from. So if we look really long term, which I don't think is a good forecast, but purchasing power parity puts a dollar at about 100 yen. And we're very far from that.”
“So I think, you know, there was an overextension going on. And then even though risk tolerance remains plentiful and the relative interest rates are still higher in the U.S. than in Japan, there is a gradual normalization taking place by the Bank of Japan, by other central banks, too, but by the Bank of Japan, most importantly, for the yen. And so that means sooner or later, there's going to be less liquidity tomorrow in the future sometime than there is today.”
“And the yen is weak because there's been this large amount of liquidity left in the system. As far as volatility goes, if we do see some sort of risk off trade, then yes, yen tends to strengthen. If we see a whole bunch of risk being taken off the table, then I would expect the yen to strengthen quickly. But that's not my main scenario. And I think that that's a scenario that most policymakers would like to avoid, if possible.”